We own a home. Can we buy another and rent one out?

You need to provide much more information than that to get any sort of useful answer. What you can qualify for depends on so many factors including the equity in your current home, your credit score, your available assets for reserves, just to name a few. Your first step is to speak with a licensed loan officer in California; your question cannot be answered on a Q&A forum, You need to apply and provide a complete financial picture.

Yes you will be able to purchase another home. Will the home you are purchasing be a new primary or investment if it will be a primary you should be able to purchase it with a 5% down payment or if it will be an investment it will require a 20% down payment. Also if you don't already have a FHA loan this could be an option as well.